AZE.US
Traditional market vendors in Azerbaijan say the rapid expansion of cross-border online retail platforms is eroding their customer base and threatening the viability of small brick-and-mortar businesses.
Retailers interviewed by local media report a sustained slowdown in sales over recent months. Many attribute the decline to the growing popularity of foreign e-commerce platforms that allow consumers to order goods directly at lower prices.
A key factor cited by vendors is the current customs framework. Individuals are allowed to import goods worth up to $300 per month without paying customs duties or value-added tax. Local traders, by contrast, face full import tariffs, VAT, rental expenses, and other operating costs.
This structural difference has widened the price gap between online imports and goods sold through physical stores, vendors say. As a result, price-sensitive consumers increasingly favor online purchases.
Economists note that such asymmetry can distort competition. When one distribution channel benefits from tax exemptions while another operates under full fiscal obligations, traditional retail faces structural disadvantages.
Official statistics reflect the shift. In 2025, Azerbaijan’s electronic retail turnover increased by 72% in real terms compared to 2024, reaching 284.9 million manats. A growing share of retail activity is now conducted via internet-based platforms and digital systems.
Policy discussions have intensified around the possibility of subjecting large e-commerce operators with annual turnover above certain thresholds to VAT obligations. Supporters argue that such measures could reduce competitive imbalances and protect domestic retail.
The broader trend highlights a familiar global dynamic: as cross-border e-commerce expands, small local retailers face mounting pressure to adapt to digital competition or risk consolidation and market exit.